Tower Power: Firm Wants To Grow Records Management Deals

A small Reston, Va., software company is courting systems integrators and channel sales firms to stake out new federal contracts for records management systems.

Tower Software Corp. is one of just three companies with software products approved for records management applications by the Defense Department. The others are Provenance Systems Inc. and PSSoftware Solutions Ltd., both of Ottawa.

Founded three years ago, Tower Software is owned mostly by its Australian parent company, Tower Software Engineering of Canberra. An undisclosed minority share of the U.S. firm is owned by its nine employees.

Tower's only product is its TRIM Electronic Recordkeeping System, which is designed to manage and organize paper and electronic records from creation to destruction. The Pentagon mandated that its agencies adopt such systems in a December 1997 policy directive.

"This is going to be a big deal," said William Hooton, Tower's president and chief executive officer. "It says to all of DoD that you have to have a records management program, and you can only choose one of these three products."

In addition, the National Archives and Records Administration has endorsed the same records management standards for the rest of the federal government, Hooton said. However, civilian agency standards are not being strictly enforced, he said.

After federal agencies finish their year 2000 remediation efforts, records management will be one area to which they will turn their attention, Hooton said. Proper documents management can save time and money, improve efficiency and reduce liability issues, he said.

"They have to do something with their records. They can't throw them in the basement and turn off the lights, as they have done for the last 150 years," he said.

Tower and other vendors are beginning to see enterprisewide deployments of their products ? covering several thousand seats at a time ? and not just office or department deployments, officials said.

To prepare for the expected jump in federal business, Tower is negotiating with potential corporate partners to expand its reach. Hooton also expects his employee count to rise to about 15 people in 1999.

"I don't want to build an army of people here," said Hooton, who prefers to let resellers do much of the sales work. "We will have a very large, indirect channel. We are going to grow it really fast and really big."

Tower now has relationships with several small resellers, but will expand rapidly as it trains more resellers, he said.

Tower recently signed a joint marketing agreement with IBM Corp. and is in discussions with other integrators since its electronic recordkeeping product was certified in February 1998 by the Defense Department's Joint Interoperability Test Command. The certification is "a pretty nice marketing tool," Hooton said.

Tower reported about $1 million in revenue for its fiscal year that ended June 30, 1998, but has a goal of $3 million in sales for the current year, Hooton said. That growth will come from support services, with software license fees playing an increasingly smaller role, he said.

Tower is now making the transition from selling seats for pilot projects, worth $25,000 to $50,000 apiece, to typical operational buys of $150,000 to $200,000 each, he said.

On Dec. 30, for example, the company won a two-year $1.1 million contract from the Federal Deposit Insurance Corp. Of that total, $270,000 is license fees and the rest is services, Hooton said.

"Our window [of opportunity] is wide open right now," he said.

The federal market for records management products and services totals in the low billions, said Hooton, who sees enough business for 20 companies.

Tower's toughest competitor is Provenance, which has partnered with major electronic document management companies like FileNet Corp. of Costa Mesa, Calif., and PC Docs Inc. of Toronto.

John McCarthy, director of sales and marketing at Provenance's U.S. office in Arlington, Va., said his company's strength lies in its partnerships with work flow and document management companies. Provenance's recordkeeping product, ForeMost, can be tightly integrated with related products from partners because of its open architecture, he said.

Provenance has deployed its product at 25 government sites, including the Air Force Material Command and Air Force Personnel Command, McCarthy said.

Tower's software suite includes technologies to support production imaging, work flow, groupware and messaging requirements within a government agency or company. Its public sector customers include the Army and the departments of Energy and the Interior.

Although the company's sales are 60 percent commercial and 40 percent federal, state and local governments, Tower plans to focus on the federal market, Hooton said.

"Right now, we have this great chance to go after the federal government market in a big way," he said. "The commercial business will come along with that."

Tower Software Corp. does no product development ? that is handled by the parent company. Instead, the Reston firm provides sales and customer support services. The parent firm, which dominates the Australian market with an 85 percent share, established the U.S. unit after it won a large electronic recordkeeping contract from the United Nations three years ago.

Geoffrey Moore, Tower vice president of operations, said records management is becoming much more important as government agencies try to cope with the explosion of paper and electronic files. Agencies need to archive important documents, create an audit trail for people who handle those documents and a schedule for destroying documents that are no longer needed.